Capitalists, Entrepreneurs, and Peer Production

by on February 27, 2007 · 44 comments

Jed Harris has a fantastic post about how peer production introduces a fissure between capitalists and entrepreneurs:

Before widespread peer production, the entrepreneur’s and capitalist’s definitions of success were typically congruent, because growing a business required capital, and gaining access to capital required providing a competitive return. So classical profit was usually required to build a self-sustaining business entity.

The change that enables widespread peer production is that today, an entity can become self-sustaining, and even grow explosively, with very small amounts of capital. As a result it doesn’t need to trade ownership for capital, and so it doesn’t need to provide any return on investment.

As others have noted, peer production is not new. The people who created educational institutions, social movements, scientific societies, etc. in the past were often entrepreneurs in the sense that I’m using here, and in their case as well, the definition of success was to create a self-sustaining entity, even though it often had no owners, and usually produced no “profit” in the classical sense.

These concepts of “profitability” can become opposed when obligations to provide classical profits to investors prevent an entity from becoming self-sustaining. In my experience, many startups die because of the barriers to participation that they create while trying to generate revenue. Of course if they are venture funded, they typically are compelled to do this by their investors. Unfortunately I don’t know of any way to get hard numbers on this phenomenon.

Conversely, there are examples where a dying business becomes a successful peer-production entity. The transformation of Netscape’s dying browser business into the successful Mozilla open source project is perhaps the clearest case. Note that while Netscape could not make enough profit from its browser to satisfy its owners, the Mozilla foundation is able to generate more than enough income to sustain its work and even fund other projects. However this income could not make Mozilla a (classically) profitable business, because wouldn’t come close to paying for all the contributions made by volunteers and other companies.

I think this is one of the big reasons why divisions among libertarians are so common with respect to these issues. Libertarianism tends to be a pro-entrepreneur, pro-capitalist political philosophy. Before peer production came along, being “pro-entrepreneur” was usually equivalent to being “pro-capitalist.” But with peer production, libertarians are, in a sense, asked to choose sides. Those who view economic progress primarily in financial terms–that is, who perceive the investor as the key player in the creation of new wealth, and the entrepreneur as merely his agent–will tend to regard peer production with suspicion, because peer production tends not to produce very much wealth that’s in a form that can easily be transferred to investors. And they also tend to be the copyright hawks, because they view the creative process primarily in financial terms: if record label aren’t able to turn a profit, there will be a lot less music (or a lot less high-quality music) produced.

On the other hand, those who have a more entrepreneur-centric view of innovation–who view investment as merely one input in the process of entrepreneurship–will find peer production as highly congenial, because peer production is simply a form of entrepreneurship that requires little or no capital as an input. These people tend to think that people have diverse motivations for engaging in craetivity, and so the lack of a direct financial return does not necessarily mean that no creative works will be produced. As you might guess, I tend to fall in this second camp.

The best example of the first camp of libertarian is libertarians political theorist Richard Epstein (one of my favorite libertarian thinkers on most other issues) who wrote the following back in 2004:

The difficulties with the open source movement , moreover, go deeper than the problems with a single provision of the GPL. The open source movement shares many features with a workers’ commune, and is likely to fail for the same reason: it cannot scale up to meet its own successes. To see the long-term difficulty, imagine a commune entirely owned by its original workers who share pro rata in its increases in value. The system might work well in the early days when the workforce remains fixed. But what happens when a given worker wants to quit? Does that worker receive in cash or kind his share of the gain in value during the period of his employment? If not, then the run-up in value during his period of employment will be gobbled up by his successor – a recipe for immense resentment. Yet that danger can be ducked only by creating a capital structure that gives present employees separable interests in either debt or equity in exchange for their contributions to the company. But once that is done, then the worker commune is converted into a traditional company whose shareholders and creditors contain a large fraction of its present and former employers.

Here Epstein seems literally incapable of imagining entrepreneurship without capital, despite the fact that it’s staring him in the face. He’s so used to thinking about entrepreneurship in financial terms that when you take financial considerations out of the picture, he’s completely lost.

Of course no libertarian should be anti-capitalist. Capitalists are extremely important to a free-market economy, and they’re indispensable for many kinds of entrepreneurship. But at the same time, there are other types of entrepreneurship in which capital is not especially crucial, and so libertarians should take care to avoid the trap of assuming that every economic transaction must be conducted on financial terms, or that every entrepreneurial activity must yield a financial profit. Both capital-intensive and peer-produced innovation are important to the economy, and as libertarians we should celebrate them both.

  • http://www.onlyrepublican.com/ Matt S

    Hi Tim, perhaps the financial value of open source/peer production should be measured in terms of consumer benefit. It could be argued that the results of their labor add wealth to the society, in the form of low-cost products. Linux might be an example — it serves a market need and provides competition. Both of those things increase prosperity.

    Libertarians, I think, would have little complaint about peer production in and of itself, since it’s a voluntary exchange. It’s still a free market in action, though not especially traditional.

    Funny thing is, I am not personally excited by most OSS that I see. But I do recognize is as a cog in the market, and that consumers have voted to sustain it.

  • http://www.onlyrepublican.com/ Matt S

    Hi Tim, perhaps the financial value of open source/peer production should be measured in terms of consumer benefit. It could be argued that the results of their labor add wealth to the society, in the form of low-cost products. Linux might be an example — it serves a market need and provides competition. Both of those things increase prosperity.

    Libertarians, I think, would have little complaint about peer production in and of itself, since it’s a voluntary exchange. It’s still a free market in action, though not especially traditional.

    Funny thing is, I am not personally excited by most OSS that I see. But I do recognize is as a cog in the market, and that consumers have voted to sustain it.

  • http://bennett.com/blog Richard Bennett

    “Peer production”, idealistically, is simply people sharing a hobby. A bunch of grannies sewing quilts isn’t far from Linux, where a bunch of geeks patch a quilt of mediocre code. And if that were the end of it, you wouldn’t have the elements of any sort of controversy. Grannies have quilted for generations and nobody gets upset over it.

    But enter the entrepreneur and two elements join the mix that transform the hobby into something of a completely different character, which we’ve seen over and over. For a pittance, the entrepreneur acquires the right to sell the product of the hobbyists. And he immediately makes overblown claims about it touts the squeaky-clean and virtuous nature of his business, which is a labor of love and not a pursuit of filthy lucre like the competition, except where he’s concerned.

    And then you get something like Firefox, a fairly decent web browser (if you don’t mind your pages bouncing around as you try to click their links) which carries a Google ad in its handy search box. So the browser that AOL bought now sends its users to the competition, and that’s all noble and virtuous because it’s a labor of love.

    A sucker is born every minute, and peer production is the most efficient system yet devised for exploiting him. But of course, exploitation is good for the consumer; slavery lowered the cost of cotton goods for a long time, after all. And as long as the young people are happy to give their labor away for free, what could be wrong with it?

    It turns out that free stuff has consequences. We used to have investigative journalism in America, but we don’t any more because Craig’s List has caused huge losses of advertising revenue in local newspapers. Now it’s cool that we can get free stuff ranging from furniture to kinky sex from Craig’s List, but what’s the consequence to democratic ideals of the death of investigative journalism?

    But that’s not a libertarian or authoritarian issue, it’s a citizenship issue, and one that will one day have a profound effect on all of us.

  • http://bennett.com/blog Richard Bennett

    “Peer production”, idealistically, is simply people sharing a hobby. A bunch of grannies sewing quilts isn’t far from Linux, where a bunch of geeks patch a quilt of mediocre code. And if that were the end of it, you wouldn’t have the elements of any sort of controversy. Grannies have quilted for generations and nobody gets upset over it.

    But enter the entrepreneur and two elements join the mix that transform the hobby into something of a completely different character, which we’ve seen over and over. For a pittance, the entrepreneur acquires the right to sell the product of the hobbyists. And he immediately makes overblown claims about it touts the squeaky-clean and virtuous nature of his business, which is a labor of love and not a pursuit of filthy lucre like the competition, except where he’s concerned.

    And then you get something like Firefox, a fairly decent web browser (if you don’t mind your pages bouncing around as you try to click their links) which carries a Google ad in its handy search box. So the browser that AOL bought now sends its users to the competition, and that’s all noble and virtuous because it’s a labor of love.

    A sucker is born every minute, and peer production is the most efficient system yet devised for exploiting him. But of course, exploitation is good for the consumer; slavery lowered the cost of cotton goods for a long time, after all. And as long as the young people are happy to give their labor away for free, what could be wrong with it?

    It turns out that free stuff has consequences. We used to have investigative journalism in America, but we don’t any more because Craig’s List has caused huge losses of advertising revenue in local newspapers. Now it’s cool that we can get free stuff ranging from furniture to kinky sex from Craig’s List, but what’s the consequence to democratic ideals of the death of investigative journalism?

    But that’s not a libertarian or authoritarian issue, it’s a citizenship issue, and one that will one day have a profound effect on all of us.

  • http://www.techliberation.com/ Tim Lee

    It turns out that free stuff has consequences. We used to have investigative journalism in America, but we don’t any more because Craig’s List has caused huge losses of advertising revenue in local newspapers.

    Do you have any evidence that the amount of investigative journalism has gone down? The number of full-time journalists working at newspapers has gone down somewhat, but there are a ton of interesting and innovative Internet-based media sources, including blogs, online magazines, podcasts, YouTube, etc. I don’t think it’s at all obvious that the odds of malfeasance coming to light is lower today than it was 10 or 50 years ago.

  • http://www.techliberation.com/ Tim Lee

    It turns out that free stuff has consequences. We used to have investigative journalism in America, but we don’t any more because Craig’s List has caused huge losses of advertising revenue in local newspapers.

    Do you have any evidence that the amount of investigative journalism has gone down? The number of full-time journalists working at newspapers has gone down somewhat, but there are a ton of interesting and innovative Internet-based media sources, including blogs, online magazines, podcasts, YouTube, etc. I don’t think it’s at all obvious that the odds of malfeasance coming to light is lower today than it was 10 or 50 years ago.

  • http://techdirt.com/ Mike Masnick

    It turns out that free stuff has consequences. We used to have investigative journalism in America, but we don’t any more because Craig’s List has caused huge losses of advertising revenue in local newspapers. Now it’s cool that we can get free stuff ranging from furniture to kinky sex from Craig’s List, but what’s the consequence to democratic ideals of the death of investigative journalism?

    This has to be one of the most ridiculous statements I’ve seen in a long time.

    Yes, let’s blame Craigslist for problems in the journalism profession. I assume Richard also “blames” Henry Ford for the end of the horse-drawn carriage market as well. And, of course, he must blame telephone switching technology on all those lost operator jobs.

    Consequences! Think of the consequences.

    Richard, it’s called competition. If the newspapers were unable to compete with Craigslist, that’s not Craigslist’s fault. It’s the newspapers.

    If there’s a real dearth of investigative reporting out there (and Tim rightly questions that assumption) then that means there’s demand in the marketplace — which is an opportunity for someone (and, there are actually quite a few interesting plays in that space).

    Yeah, competition has consequences, but blaming those who see opportunities and provide the market with what they want for the troubles facing those too slow or too stupid to go after the opportunity, is an odd way of looking at the world.

  • http://techdirt.com/ Mike Masnick

    It turns out that free stuff has consequences. We used to have investigative journalism in America, but we don’t any more because Craig’s List has caused huge losses of advertising revenue in local newspapers. Now it’s cool that we can get free stuff ranging from furniture to kinky sex from Craig’s List, but what’s the consequence to democratic ideals of the death of investigative journalism?

    This has to be one of the most ridiculous statements I’ve seen in a long time.

    Yes, let’s blame Craigslist for problems in the journalism profession. I assume Richard also “blames” Henry Ford for the end of the horse-drawn carriage market as well. And, of course, he must blame telephone switching technology on all those lost operator jobs.

    Consequences! Think of the consequences.

    Richard, it’s called competition. If the newspapers were unable to compete with Craigslist, that’s not Craigslist’s fault. It’s the newspapers.

    If there’s a real dearth of investigative reporting out there (and Tim rightly questions that assumption) then that means there’s demand in the marketplace — which is an opportunity for someone (and, there are actually quite a few interesting plays in that space).

    Yeah, competition has consequences, but blaming those who see opportunities and provide the market with what they want for the troubles facing those too slow or too stupid to go after the opportunity, is an odd way of looking at the world.

  • Doug Lay

    I concur with Mike. Richard, that’s got to be one of the most useless pieces of blubber I’ve ever seen you write. There is nothing whatsoever wrong with Craigslist. Perhaps if American newspapers spent the last 20 years focusing on journalism of relevance to local communities, instead of homogenized wire-service-based fare, Craigslist would not have found it so easy to eat their collective lunch.

  • Doug Lay

    I concur with Mike. Richard, that’s got to be one of the most useless pieces of blubber I’ve ever seen you write. There is nothing whatsoever wrong with Craigslist. Perhaps if American newspapers spent the last 20 years focusing on journalism of relevance to local communities, instead of homogenized wire-service-based fare, Craigslist would not have found it so easy to eat their collective lunch.

  • http://weblog.ipcentral.info/ Noel Le

    Sorry, Richard, I”m usually with you, but not with the Craigslist example.

    I like Masnick’s comment. It can be generalized to the FOSS movement. If they can’t compete with IP firms, then stop with the religious PR antics (I recall Red Hat saying their innovation is not tainted with capital, even though they’re listed on the NASDAQ, have receieved VC and are obviously trying to push up sales). Further, software patents are not harming FOSS; as far as I see, its their business model thats keeping the $10 billion dollar annual revenue ceiling in place, not the threat of litigation. FOSS’ criticism of software patents is merely a way to keep talking while its having a hard time competing.

    This post is still odd. Tim misreads Epstein, interpreting him to be saying that what he’s referring to (FOSS) does not exist, whereas Epstein is talking about the viability of FOSS. Tim, if you don’t think FOSS benefits from formal capital structures in its inputs, like Epstein says, then tell Red Hat to get rid of its paid programmers.

    Also, why is it so important that FOSS be considered under the terms “economic” and “entrepreneural?” Would FOSS receive more legitimacy? Any activity is “economic” in the widest sense, but then there are contexts where activity unconcerning capital is not factored in: look at our standard economic indicators, you’re not suggesting that basic GDP and industrial growth metrics be changed to accomodate FOSS are you Tim? As far as entrepreneural, I haven’t seen anybody say that peer-production or activity undertaken outside profit-motive is not entrepreneural.

  • http://weblog.ipcentral.info/ Noel Le

    Sorry, Richard, I”m usually with you, but not with the Craigslist example.

    I like Masnick’s comment. It can be generalized to the FOSS movement. If they can’t compete with IP firms, then stop with the religious PR antics (I recall Red Hat saying their innovation is not tainted with capital, even though they’re listed on the NASDAQ, have receieved VC and are obviously trying to push up sales). Further, software patents are not harming FOSS; as far as I see, its their business model thats keeping the $10 billion dollar annual revenue ceiling in place, not the threat of litigation. FOSS’ criticism of software patents is merely a way to keep talking while its having a hard time competing.

    This post is still odd. Tim misreads Epstein, interpreting him to be saying that what he’s referring to (FOSS) does not exist, whereas Epstein is talking about the viability of FOSS. Tim, if you don’t think FOSS benefits from formal capital structures in its inputs, like Epstein says, then tell Red Hat to get rid of its paid programmers.

    Also, why is it so important that FOSS be considered under the terms “economic” and “entrepreneural?” Would FOSS receive more legitimacy? Any activity is “economic” in the widest sense, but then there are contexts where activity unconcerning capital is not factored in: look at our standard economic indicators, you’re not suggesting that basic GDP and industrial growth metrics be changed to accomodate FOSS are you Tim? As far as entrepreneural, I haven’t seen anybody say that peer-production or activity undertaken outside profit-motive is not entrepreneural.

  • http://bennett.com/blog Richard Bennett

    How much investigative journalism do “blogs, online magazines, podcasts, and YouTube” do? How much does Craig’s List do?

    Investigative journalism dies without a source of funding, and even Craig Newmark knows that, which is why he made a token contribution to start an open source investigative journalism fund. It’s going nowhere, of course, because it doesn’t have enough money to do anything real.

    But who needs Woodward and Bernstein when we have Brittany and Anna Nicole’s corpse?

  • http://bennett.com/blog Richard Bennett

    How much investigative journalism do “blogs, online magazines, podcasts, and YouTube” do? How much does Craig’s List do?

    Investigative journalism dies without a source of funding, and even Craig Newmark knows that, which is why he made a token contribution to start an open source investigative journalism fund. It’s going nowhere, of course, because it doesn’t have enough money to do anything real.

    But who needs Woodward and Bernstein when we have Brittany and Anna Nicole’s corpse?

  • http://bennett.com/blog Richard Bennett

    See Wonkette today for a nice snapshot on what Craig’s List is doing to American journalism.

    At the Washington Post: “In Q4, classified advertising plummeted 22% to $12.5 million. For the year, the category fell 14% to $68.1 million.”

    That money has to come from somewhere, and parasitic web sites aren’t filling the vacuum.

  • http://bennett.com/blog Richard Bennett

    See Wonkette today for a nice snapshot on what Craig’s List is doing to American journalism.

    At the Washington Post: “In Q4, classified advertising plummeted 22% to $12.5 million. For the year, the category fell 14% to $68.1 million.”

    That money has to come from somewhere, and parasitic web sites aren’t filling the vacuum.

  • Doug Lay

    A classified advertising service has no obligation whatsoever to fund investigative journalism. Zero. Richard sounds like the dumbest kind of bleeding-heart liberal.

  • Doug Lay

    A classified advertising service has no obligation whatsoever to fund investigative journalism. Zero. Richard sounds like the dumbest kind of bleeding-heart liberal.

  • http://techdirt.com/ Mike Masnick

    I like how Richard doesn’t actually respond to the actual points raised by everyone above, and instead repeats the ridiculous and baseless claim that because Craigslist serves the market, it’s at fault for the newspaper industry’s inability to find a working business model.

    Btw, Richard, this provides much greater insight into your net neutrality position. You seem to have these weird blinders where you believe that incumbent business models have some sort of inalienable right to be protected against competition.

    It’s hard to see how that makes sense, but at least you’re consistent.

  • http://techdirt.com/ Mike Masnick

    I like how Richard doesn’t actually respond to the actual points raised by everyone above, and instead repeats the ridiculous and baseless claim that because Craigslist serves the market, it’s at fault for the newspaper industry’s inability to find a working business model.

    Btw, Richard, this provides much greater insight into your net neutrality position. You seem to have these weird blinders where you believe that incumbent business models have some sort of inalienable right to be protected against competition.

    It’s hard to see how that makes sense, but at least you’re consistent.

  • http://bennett.com/blog Richard Bennett

    This is so predictable it would be funny if it weren’t so boring. I make the well-supported observation that Craig’s List is siphoning-off revenues from the daily papers, and point out the consequences and I get jumped-on by several morons who read their own fixations into my observation.

    * Did I say newspapers are entitled to the ad revenues they had before Craig’s List? Nope, I did not.

    * Did I say that Craig’s List should be shut down? Nope, I did not.

    * Did I say Free Stuff is the root of all evil? Nope, I did not.

    What I did was inject one of the side-effects of peer production and user-based-content into a a tedious affirmation of the virtue of hobbyists that I’ve read so many times on this blog that it makes me want to spew, and the wounded dogs came out of the bushes.

    What value do web sites like “Tech Dirt” create? They simply read the tech press and summarize somes stories. Some of their summaries are accurate enough, and some are wildly bizarre, but not a one of them is the real “dirt” on anything important. Real investigative journalism gives us the dirt, but if it can’t find a new financial model shortly it really will die.

    And “Tech Dirt” is no substitute for investigative journalism, it’s just an old-fashioned clipping service with delusions of grandeur.

  • http://bennett.com/blog Richard Bennett

    This is so predictable it would be funny if it weren’t so boring. I make the well-supported observation that Craig’s List is siphoning-off revenues from the daily papers, and point out the consequences and I get jumped-on by several morons who read their own fixations into my observation.

    * Did I say newspapers are entitled to the ad revenues they had before Craig’s List? Nope, I did not.

    * Did I say that Craig’s List should be shut down? Nope, I did not.

    * Did I say Free Stuff is the root of all evil? Nope, I did not.

    What I did was inject one of the side-effects of peer production and user-based-content into a a tedious affirmation of the virtue of hobbyists that I’ve read so many times on this blog that it makes me want to spew, and the wounded dogs came out of the bushes.

    What value do web sites like “Tech Dirt” create? They simply read the tech press and summarize somes stories. Some of their summaries are accurate enough, and some are wildly bizarre, but not a one of them is the real “dirt” on anything important. Real investigative journalism gives us the dirt, but if it can’t find a new financial model shortly it really will die.

    And “Tech Dirt” is no substitute for investigative journalism, it’s just an old-fashioned clipping service with delusions of grandeur.

  • http://techdirt.com/ Mike Masnick

    Ah, yes. Nice to converse with you too, Richard. Weren’t you just the one who was complaining about random “insults” rather than debates? I’m so glad to see you raise the level of debate by not actually responding to my points, but instead going for an ad hominem attack on myself and my company — whose business you know nothing about.

    You might want to try actually talking to some of our customers who get plenty of value out of our services before you go off half-cocked about the lack of “value” our business provides. Yes, we actually have a business model that works (which you seem to think is important, but apparently it’s no good for us since you seem to have some bizarre fixation with insulting me).

    In fact, Tim was kind enough to discuss both the value we add and our business model recently. http://www.techliberation.com/archives/041526.php

    We never claimed to be investigative journalists. I’m not sure where you picked that idea up from. However, to say we add no value only shows your own ignorance. I’d be happy to put you in touch with a few of our customers if you’d like to be proven wrong.

  • http://techdirt.com/ Mike Masnick

    Ah, yes. Nice to converse with you too, Richard. Weren’t you just the one who was complaining about random “insults” rather than debates? I’m so glad to see you raise the level of debate by not actually responding to my points, but instead going for an ad hominem attack on myself and my company — whose business you know nothing about.

    You might want to try actually talking to some of our customers who get plenty of value out of our services before you go off half-cocked about the lack of “value” our business provides. Yes, we actually have a business model that works (which you seem to think is important, but apparently it’s no good for us since you seem to have some bizarre fixation with insulting me).

    In fact, Tim was kind enough to discuss both the value we add and our business model recently. http://www.techliberation.com/archives/041526.php

    We never claimed to be investigative journalists. I’m not sure where you picked that idea up from. However, to say we add no value only shows your own ignorance. I’d be happy to put you in touch with a few of our customers if you’d like to be proven wrong.

  • http://bennett.com/blog Richard Bennett

    Oh, did I hurt your feelings, Mike? Well shame on me. I should have known that it’s OK for little ole you to say: “Yes, let’s blame Craigslist for problems in the journalism profession. I assume Richard also “blames” Henry Ford for the end of the horse-drawn carriage market as well. And, of course, he must blame telephone switching technology on all those lost operator jobs” but not for me to respond by pointing out that your tedious clipping service is neither innovative nor valuable.

    And if you don’t pretend to be investigate, why the words “dirt” and “corporate intelligence” in your name and slogan?

    Web sites like Tech Dirt are a dime a dozen, and the best one is written by robots. But all these things do is cannibalize and recycle the work of journalists, so when they go, you go.

    But let’s not talk about that, it’s too “big picture” for tech analysis.

    Crybaby.

  • http://bennett.com/blog Richard Bennett

    Oh, did I hurt your feelings, Mike? Well shame on me. I should have known that it’s OK for little ole you to say: “Yes, let’s blame Craigslist for problems in the journalism profession. I assume Richard also “blames” Henry Ford for the end of the horse-drawn carriage market as well. And, of course, he must blame telephone switching technology on all those lost operator jobs” but not for me to respond by pointing out that your tedious clipping service is neither innovative nor valuable.

    And if you don’t pretend to be investigate, why the words “dirt” and “corporate intelligence” in your name and slogan?

    Web sites like Tech Dirt are a dime a dozen, and the best one is written by robots. But all these things do is cannibalize and recycle the work of journalists, so when they go, you go.

    But let’s not talk about that, it’s too “big picture” for tech analysis.

    Crybaby.

  • http://bennett.com/blog Richard Bennett

    Incidentally, I do “blame” Henry Ford for the end of the horse-drawn carriage market.

    Isn’t that radical?

  • http://bennett.com/blog Richard Bennett

    Incidentally, I do “blame” Henry Ford for the end of the horse-drawn carriage market.

    Isn’t that radical?

  • Doug Lay

    Richard, learn to write. When you bring up “parasitic web sites” and the only Web site you’ve called out by name in the previous two comments is Craigslist, it’s not moronic to figure you’re calling Craigslist the parasite.

    I also reject the idea that there was some sort of golden age of investigative journalism before Craigslist came along. Newspapers were kicking out plenty of celebrity-obsessed crapola and navel-gazing “analysis” in place of hard news long before Craigslist came on the scene.

  • Doug Lay

    Richard, learn to write. When you bring up “parasitic web sites” and the only Web site you’ve called out by name in the previous two comments is Craigslist, it’s not moronic to figure you’re calling Craigslist the parasite.

    I also reject the idea that there was some sort of golden age of investigative journalism before Craigslist came along. Newspapers were kicking out plenty of celebrity-obsessed crapola and navel-gazing “analysis” in place of hard news long before Craigslist came on the scene.

  • Josh Fidel

    You know, I hope net neutrality fails for the simple fact that the resulting traffic shaping will slow the dissemination of Richard Bennet’s nonsense.

  • Josh Fidel

    You know, I hope net neutrality fails for the simple fact that the resulting traffic shaping will slow the dissemination of Richard Bennet’s nonsense.

  • dimitris

    Please allow me to suggest a powerpoint version:

    Finance as an end – tail wags dog.

    User value as an end – dog wags tail.

    Financial returns and user value often correlate, but (increasingly, at this moment in history) not always.

    Forcing this correlation to either side of the scale requires the illegitimate use of guns.

    There exist apparent supporters of this illegitimate use of guns who also think Craigslist is a parasitic website.

  • dimitris

    Please allow me to suggest a powerpoint version:

    Finance as an end – tail wags dog.

    User value as an end – dog wags tail.

    Financial returns and user value often correlate, but (increasingly, at this moment in history) not always.

    Forcing this correlation to either side of the scale requires the illegitimate use of guns.

    There exist apparent supporters of this illegitimate use of guns who also think Craigslist is a parasitic website.

  • http://bennett.com/blog Richard Bennett

    Name one, dimitris, if you can.

  • http://bennett.com/blog Richard Bennett

    Name one, dimitris, if you can.

  • Peter Amstutz

    I’m a little hesitant to wade into this discussion seeing how it seems to already have gone off the rails into ad hominum attacks, but nevertheless, my two cents…

    If we’re looking at this from the point of view of overall social good (minimizing conflicts, maximizing standard of living, etc) and not individual personal gain, there are interesting arguments on both sides. Clearly, on the free side, the social benefit is readily apparent: the programmers do it because they’re creating something they want to use, and the rest of us benefit. All things being equal, a 3rd party business using free software is obviously going to have a better bottom line than one that is required to pay Microsoft licensing fees every year.

    The other side, that tends to get obscured in these discussions, is that there are a good many things that can’t or won’t be done without a large concentration of capital. Free software, by its nature, requires a more subtle approach to making money that the obvious model of selling licenses (* although some people do just that). The main capitalist argument against free software seems to be that there is an opportunity cost that arises when people won’t invest in new, cool stuff, so that new, cool stuff won’t get made and society overall loses the benefit of innovation.

    The problem with software and other “intellectual property” is that there are fewer natural costs of production: given sufficient time, skill and motivation a programmer could rewrite Windows on his home PC, but no matter my motivation or knowledge I can’t build the Golden Gate bridge without lots of concrete, steel, and heavy machinery.

    I think one way that people tend to talk past each other is talking about funding the primary activity vs. indirect funding, where one revenue stream supports another activity. If the issue is investigative journalism, let’s talk about how to fund investigative journalism, not about how investigative journalism has historically been under the umbrella of a particular type of organization and because that organization is in trouble, this means the death of journalism.

    On a final note, Talking Points Memo is a good example of a very popular blog that does a lot of independent investigative journalism, having among other things directly spawned a sibling site TPM Muckraker. These sites focus on national issues, of course, and it remains to be seen how well this model will scale down to local issues.

  • Peter Amstutz

    I’m a little hesitant to wade into this discussion seeing how it seems to already have gone off the rails into ad hominum attacks, but nevertheless, my two cents…

    If we’re looking at this from the point of view of overall social good (minimizing conflicts, maximizing standard of living, etc) and not individual personal gain, there are interesting arguments on both sides. Clearly, on the free side, the social benefit is readily apparent: the programmers do it because they’re creating something they want to use, and the rest of us benefit. All things being equal, a 3rd party business using free software is obviously going to have a better bottom line than one that is required to pay Microsoft licensing fees every year.

    The other side, that tends to get obscured in these discussions, is that there are a good many things that can’t or won’t be done without a large concentration of capital. Free software, by its nature, requires a more subtle approach to making money that the obvious model of selling licenses (* although some people do just that). The main capitalist argument against free software seems to be that there is an opportunity cost that arises when people won’t invest in new, cool stuff, so that new, cool stuff won’t get made and society overall loses the benefit of innovation.

    The problem with software and other “intellectual property” is that there are fewer natural costs of production: given sufficient time, skill and motivation a programmer could rewrite Windows on his home PC, but no matter my motivation or knowledge I can’t build the Golden Gate bridge without lots of concrete, steel, and heavy machinery.

    I think one way that people tend to talk past each other is talking about funding the primary activity vs. indirect funding, where one revenue stream supports another activity. If the issue is investigative journalism, let’s talk about how to fund investigative journalism, not about how investigative journalism has historically been under the umbrella of a particular type of organization and because that organization is in trouble, this means the death of journalism.

    On a final note, Talking Points Memo is a good example of a very popular blog that does a lot of independent investigative journalism, having among other things directly spawned a sibling site TPM Muckraker. These sites focus on national issues, of course, and it remains to be seen how well this model will scale down to local issues.

  • http://bennett.com/blog Richard Bennett

    TPM is a gossip site, mainly passing along tips sent by people with an ax to grind.

    The financial support for investigative journalism can easily shift from classified ad support to conventional ad support provided that pieces can be published in multiple formats. If one company owns a TV channel, AM and FM radio, a newspaper, and a website, there are probably enough total eyeballs on each piece to cover the costs, especially with a little syndication.

    But this kind of media consolidation is opposed by the same interest groups that support net neutrality: George Soros-funded organizations Free Press and Moveon.org. So one might ask, without the slightest trace of paranoia, what Soros has against investigative journalism.

    Is he set on wrecking investigative journalism to shield shady business dealings from scrutiny? Some have suggested as much.

  • http://bennett.com/blog Richard Bennett

    TPM is a gossip site, mainly passing along tips sent by people with an ax to grind.

    The financial support for investigative journalism can easily shift from classified ad support to conventional ad support provided that pieces can be published in multiple formats. If one company owns a TV channel, AM and FM radio, a newspaper, and a website, there are probably enough total eyeballs on each piece to cover the costs, especially with a little syndication.

    But this kind of media consolidation is opposed by the same interest groups that support net neutrality: George Soros-funded organizations Free Press and Moveon.org. So one might ask, without the slightest trace of paranoia, what Soros has against investigative journalism.

    Is he set on wrecking investigative journalism to shield shady business dealings from scrutiny? Some have suggested as much.

  • http://sco.tt Scott Yates

    Sorry, but I have to call BS on this whole damn topic. “Peer Production” is a topic that allows some academic to fritter away some of his or her productive years writing a thesis that nobody will ever read. Is it unique? Maybe, but who cares. Will it help one actual entrepreneur get something done? No way.

    “Peer Production” is a bad buzz word. “Credit Card VC” is what I call it, and that actually means something. I’m not recommending that as the new buzz words, what I’m recommending is that we all just get to work doing it rather than trying to decide what it should be called.

    OK, back to work.

  • http://sco.tt Scott Yates

    Sorry, but I have to call BS on this whole damn topic. “Peer Production” is a topic that allows some academic to fritter away some of his or her productive years writing a thesis that nobody will ever read. Is it unique? Maybe, but who cares. Will it help one actual entrepreneur get something done? No way.

    “Peer Production” is a bad buzz word. “Credit Card VC” is what I call it, and that actually means something. I’m not recommending that as the new buzz words, what I’m recommending is that we all just get to work doing it rather than trying to decide what it should be called.

    OK, back to work.

  • http://ktcatspost.blogspot.com K T Cat

    Tim,

    I was wrong when I first read this post. I will go change what I wrote on my blog. I’m very sorry for having been such a dunderhead.

  • http://ktcatspost.blogspot.com K T Cat

    Tim,

    I was wrong when I first read this post. I will go change what I wrote on my blog. I’m very sorry for having been such a dunderhead.

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